Ardent Mills executives hail dawn of new era for flour milling

Only a few days following the birth of a new company, the largest flour milling business in U.S. and probably global history, the top executives of Ardent Mills voiced unbridled enthusiasm about the company’s launch and prospects.

Dan Dye, chief executive officer of Ardent Mills, and Bill Stoufer, the company’s chief operating officer and chief integration officer, discussed the new company and their plans for its future in a June 2 interview with Milling & Baking News. The two were in Kansas City for the 2014 Purchasing Seminar sponsored by the magazine.

First announced in March 2013, Ardent Mills was created by combining the milling assets of ConAgra Foods, Cargill and CHS. In effect, the new business represents the combination of two companies — ConAgra Mills and Horizon Milling L.L.C., which itself was a joint venture of Cargill and CHS. Completion of the transaction was delayed by a competitive review that was resolved through the sale of 4 of the companies’ 44 U.S. flour mills. The new company will be headquartered in Denver, beginning later this year. In addition to its 40 mills, Ardent Mills will operate 3 bakery mix plants and 1 specialty bakery.

Mr. Dye came to Ardent from Horizon Milling, where he was president. Mr. Stoufer was president and chief operating officer of ConAgra Mills. Satellite offices will be maintained in the Minneapolis area and Omaha, where Horizon Milling and ConAgra Mills, respectively, were based.

“We are committed to bringing a new approach and a new presence to the flour milling industry,” Mr. Dye said. “It’s a reflection of our commitment to the future of milling and grain-based foods. We truly are excited about the opportunities for our employees, customers and communities.”

Mr. Stoufer noted that while plans for the creation of Ardent Mills were first announced 15 months ago, the actual implementation of the merger did not occur until May 29.

“People might assume we’re further along in the integration than we are, but that’s not so since we operated as competitors right until the moment we could operate as Ardent Mills,” Mr. Stoufer noted. “We have a very methodical, well laid out integration plan. Right now, what’s impressive in five days of existence is how well our people are working together. Very strong collaboration with laser-like customer focus is how I’d describe it.

“We’re in a lot better position than we thought possible five days into it.”

Mr. Dye, too, credited the newly formed team for “setting a high bar” in creating a sense of unity.

“It’s a sense of, ‘We are Ardent Mills.’ ‘We are one company,’” he explained.

Without offering details into the courtship and negotiations between the companies that culminated with the announcement of plans to form Ardent Mills, Mr. Dye said the agreement was the outcome of a “process over time” that determined a business combination “really made good, logical sense in terms of what the organizations wanted to accomplish for the future in terms of growth, better service for customers and more value in the flour milling space.”

Mr. Stoufer emphasized a “hinge” role played by the smallest Ardent Mills partner in bringing ConAgra Mills and Horizon Milling together.

“CHS is an important supplier to both organizations so there was a lot of history with the corporate entities at CHS, ConAgra Foods and Cargill even prior to the announcement of Ardent Mills,” he said. “Cargill is an important supplier to ConAgra Foods as is CHS to both of the legacy milling companies, so there was a lot of comfort between the parents.”

During the 12 years of the Horizon Milling joint venture, the joint company frequently promoted the value of tapping into each parent companies’ strengths, including wheat origination, trading expertise and a portfolio of ingredients beyond flour. Mr. Dye said additional capabilities from ConAgra Foods around consumer insights, research and development and food safety will be layered into Ardent Mills.

The new company will, like Horizon Milling, “bring value for our customers from the strengths and skill sets and the resources of the parent companies, but we will just be doing it a little bit differently as an independent joint venture,” Mr. Dye said.

This difference, he added, ultimately will provide heightened value to customers, to the new company and to the corporate parents.

While they described the integration as moving apace, much remains to be done.

“There are practical challenges around different systems that we’re bringing together that are part of bringing any organizations together,” Mr. Dye said. “But now that we’re past the uncertainty around this, people can really start engaging.”

Mr. Stoufer, who is leading the integration effort, emphasized that flexibility, and not just methodical organization, is an important ingredient in bringing the companies together.

“Like anything, the integration work is more of a journey than it is a final destination,” he said. “We have a calendar, it’s a strong calendar. We’re still in the process of finalizing it and putting what I would say are the finishing touches on our timelines and deadlines, but each day we uncover things that we need to put on that calendar, and each day there are things that we can take off because we don’t need to worry about it. It’s a living, breathing thing. Obviously we want it done as fast as we can do it because it’s about how we will maximize value for customers. Where we are putting the emphasis is where do we create the value for our customers going forward. I.T. systems are one of them.”

In case of sales contacts, care has been taken to ensure each customer knows their Ardent sales contact.

“Even if a customer calls somebody that they had maybe traditionally dealt with, there are teams and plans in place to serve them even better,” Mr. Stoufer said. “That execution will not become an excuse for us to fail on a customer. And the teams are executing, I would say right now, flawlessly against those expectations. Every day we learn more, we keep adjusting and tweaking what we’re doing, but it’s all with a laser like customer focus to service the customer.”

On paper, the three j.v. partners forming Ardent Mills seem like highly disparate businesses — a farmer-owned cooperative; a privately held, diversified global trading, processing and service company; and a publicly-traded corporation that, for 40 years, has sought to become a leading consumer packaged goods company. Mr. Stoufer expressed confidence that corporate clash, sometimes a problem in major integrations, will not prove a significant impediment in the development of Ardent Mills.

“It may surprise people to know there is a lot more in common than there are differences,” he said. “It might be called something different, but the spirit around the businesses was awfully similar. We started in the same spot with intent. We ended in the same spot. The journey might have been different, but both businesses were running as independent operating companies with, for example, safety top of mind. The focus and the effort were in the right spots. Those things drive the culture. When you have that strong alignment, a lot of the processes, ways you are running the businesses, are culturally similar. There are differences, but they all are manageable. There are some ways in which being independent will allow us to remove some of the things that don’t apply to the business and create our own way forward.”

Mr. Dye added, “What’s very exciting is about creating the culture of Ardent Mills. It will be a new culture. That is happening already in a seamless way, but the approach we are taking is resonating. As Bill said, we were already similar in a lot of ways. The values are around trust, serving, simplicity and safety. People feel good about that kind of organization. We’ve spent considerable time thinking about the importance of having a strong culture, one that ultimately will be determined by our people, how we serve our customers and how we interact with one another. We think it is going to come together very nicely.”

Asked to comment further on the “simplify” objective, Mr. Dye said starting anew as an independent company provides an opportunity to find ways to diminish complexity.

“I’d also like to add something on ‘trust,’” he said. “It was important to both organizations, but remember, we are bringing together two competitors. To say, ‘We are going to build on that trust right from the beginning,’ is very important for us. All the early evidence is that people have responded well.”

Point person for assembling the Ardent Mills team was Deon MacMillan, the company’s chief human resources officer. An outside hire, Ms. MacMillan’s background included work with Koch Industries, Ingenix and Thomson Reuters.

“When we brought Deon on board, she put together a very thorough, thoughtful, compassionate plan to handle the people situation,” Mr. Stoufer said. “We’ve been true to our word in the process. We have been clear and transparent with everybody along the way and laid out a very coordinated calendar of when and how things will happen. I think it really boils down to just being honest with your employees about the journey. That’s something that I know both Dan and I take pride in — clarity and honesty in the journey.”

Elaborating on the process, Mr. Dye described a “decision making matrix” for shaping the entire transition, including assembling the management team.

“And that matrix was making decisions that were best for Ardent Mills, best for the people — employees and team members of Ardent Mills and best for the customer,” Mr. Dye said. “And when we use that filter to make people selections and to really use the process that Bill talked about in a robust way, it allowed us to build a team that we think is the best one for Ardent Mills, best for the employees and best for our customers, and that’s what our focus has been in this process.”

Heading the sales function at Ardent Mills will be an executive new to flour milling — Dean Grossman, who has been named vice-president of sales.

“Dean is committed to building a team that will really drive value for the customer,” Mr. Dye said. “He’s a proven leader, proven sales professional and has been able to build teams in different parts of his career and at different companies, including Cargill and DuPont.”

Mr. Dye said the sales focus will be on creating a single team serving customers as Ardent Mills and “do it in a really strong and innovative way.”

“I think also in the area of innovation and new ideas and new products, both organizations have already done a lot in this space, but we now have an opportunity to do even more,” he said. “We are very excited about that and think we can do that more effectively together than we could do it independently. And as our customers have changed we recognize that we have to change as well, and we just feel that Ardent Mills will be much better positioned to serve a changing customer base, changing consumer trends and tastes, and changing opportunities that are out there.”

For customers large and small, the two-score locations where Ardent Mills operates may be able to offer service much different from what even the largest U.S. milling companies have offered in the past, Mr. Dye said.

“An example might be in the supply chain where we could dedicate milling capacity to a specific customer for a specific flour that meets their specifications,” Mr. Dye said. “The consistency of that in backing up supply and providing support for such an approach is something we’ll be able to do much more effectively with the broader network of 40 mills than with 20 or 21.”

The larger number also may offer customers confidence about the dependability of their supply chain, Mr. Stoufer added.

“I think one thing the winter storms taught us was the importance of redundancy and contingency planning,” he said. “That is another strong area where Ardent Mills will really be able to provide comfort to the customer — that when they buy a product from us and order the different flours we make, they will arrive on time and when the customer needs it.”

Mr. Dye identified risk management as an arena in which all the owners of the j.v. would be able to provide customer benefits.

“Ardent Mills will help our customers more effectively manage price risk as well as supply chain risk that Bill talked about in terms of transportation disruptions and some of the other factors around that,” he said. “That’s an area where we think our focused efforts will really be valuable to the customer as evidenced by the response to the Purchasing Seminar and the growth of that event. That’s a really important area for our customers and for the baking industry, and we’re going to be positioned to help our customers even more as Ardent Mills on risk management.”

Mr. Stoufer said about 200 Ardent Mills associates will office at the company’s Denver headquarters. While some of those employees will relocate there as early as this summer, others will transition to the Mile High City over a period of 12 to 18 months, he said.

Overall, ConAgra Mills, just before Ardent Mills began operating, had 1,000 employees, including 100 at the company’s Omaha headquarters. Horizon Milling had 1,400 employees, including 140 in the company’s Minneapolis headquarters. Headquarters’ employees who do not join Ardent Mills or take positions with ConAgra Foods or Cargill will transition from the company in the coming months.

Offering further detail into what lies ahead, Mr. Stoufer said Ardent Mills will operate its own laboratory and research and development structure in Denver.

“We will move it at an appropriate time when it’s not new crop time, and we’ll be very cognizant of timing of that transition,” he said. “But we’ll also tap into and utilize key learnings and opportunities from the parents. I think R.&D. is one area where we can leverage the ingredients of Cargill, the consumer insights of ConAgra and the origination capabilities of CHS to really deliver very unique solutions to potential R.&D. opportunities that exist.”

Whole grains have been a centerpiece of the ConAgra Mills business strategy in recent years and have been an area of focus for Horizon as well. Mr. Dye said whole wheat will remain important at Ardent Mills.

“We see a lot of growth and opportunity in whole wheat, and we are looking forward to continuing to find, again, new ways to bring whole wheat flours and other whole grain ingredients to products and innovations for customers,” Mr. Dye said. “We’ve seen that in the school lunch programs. We’ve seen it in a whole host of different product applications and we look for that to continue.

“I think one of the key things is continuing to find ways that those products are not only nutritious and healthy, but they also taste good and are part of the diet that people feel good about being comfortable with in terms of the taste and the texture profile and all of those things. There has been a lot good work done on that, and we see more opportunity to make that even better.”

While data issued in recent quarters indicated a pause in the growth in demand for whole grain flour, Mr. Stoufer firmly expressed his belief that further expansion would be forthcoming.

“Dan hit on taste and texture — how can we continue to deliver wellness to people with the same taste and texture that they’re used to?” he said. “There’s still a lot more runway for growth when it comes to whole grains. And whole grains can be other grains too, like whole ancient grains, whole grain barleys, things like that. There’s a lot of grains out there that are incredibly beneficial to people, and we’ll find the right way to put it in a package that will drive growth of grain-based consumption.”

In addition to an upbeat view of prospects for Ardent Mills the company, Mr. Dye expressed an optimistic outlook for flour milling in general and its national association — the North American Millers’ Association.

“It’s a vibrant industry, and the importance of grain-based foods to the consumer and to healthy balanced diets is greater than it’s ever been,” he said. “And NAMA does a nice job of bringing together the industry. It has been a great organization to help make sure that we’re looking at issues in a coordinated fashion and a consistent manner. That we’re looking at new ideas such as putting vitamin D in the enrichment in flour, is part of the process of working together as an industry to find better solutions. We look forward to being a part of it as we go forward.”

The executives went on to highlight the “grain chain” and Grain Foods Foundation.

“They are key groups cooperating up and down the food chain, cooperating to ensure the delivery in a vibrant, consistent message around the goodness of grain, and Ardent Mills wants to support that,” Mr. Stoufer said.

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